Over one 6-month stretch last year I processed 18 rental applications across my 9 properties. The rent guarantee company declined 4 of them. That is a 22 percent rejection rate, high enough that I sat down and pulled the reasons apart, because every rejection cost me between 8 and 17 extra days of vacancy while I found another applicant or re-submitted to a different guarantor. When I dug in, the four rejections came down to just three factors, and two of them were things I could have screened for myself before ever sending the file.
How Guarantee Company Screening Works
ud83duded2 RECOMMENDED ON AMAZON US
Top Property Management Books
Build the knowledge base that separates professional landlords from amateur ones.
In Japan a rent guarantee company, chintai hosho gaisha, stands in for the old personal guarantor. The tenant pays them roughly 50 percent of one month’s rent upfront plus about 10,000 yen a year, and in exchange they cover unpaid rent for me and pursue the tenant themselves. Before they take that risk they run their own check. There are broadly two kinds of company: credit-affiliated ones that pull the tenant’s card and loan history from the national credit bureaus, and independent ones that mostly check their own industry database of past rental defaults. The credit-affiliated companies reject more often but give me a stronger guarantee. Which type your agent uses by default matters a lot.
The Three Rejection Drivers in My Data
ud83duded2 RECOMMENDED PRODUCTS
Landlord-Tenant Law Guides
Know exactly what you can and cannot do u2014 essential reading before any dispute.
Here is what actually sank the four applications:
- Rent-to-income ratio too high: 2 of the 4. Both applicants had monthly rent landing above 33 percent of their take-home pay. One was at nearly 40 percent for a 78,000 yen unit on a stated income that did not support it.
- Residence card expiry inside the lease term: 1 of the 4. The applicant’s card expired 8 months out, and the 2-year lease plus the guarantee ran well past that. The credit-affiliated company would not guarantee beyond the card date.
- Prior rental arrears on file: 1 of the 4. The independent company’s shared database flagged a past default from about three years earlier. The applicant had not mentioned it, and there was no arguing with the record.
Not one rejection was about nationality, job type, or age on its own. It was ratio, documents, and history.
The Rent-to-Income Number I Now Use
Most guarantee companies want annual rent to sit at or below about 25 to 30 percent of annual income, which is roughly the same as monthly rent being under a third of monthly income. I now apply my own filter before submission: verified monthly income of at least 3 times the rent, or 2.5 times for my smaller studio units where utilities are low. If an applicant cannot show that with a withholding statement or a few months of pay slips, I tell them upfront that the guarantee company is likely to decline, and I suggest either a cheaper unit or adding a co-applicant. That one conversation has saved me at least three wasted submissions this year.
The Residence Card Trap
ud83duded2 RECOMMENDED PRODUCTS
Property Inspection Forms & Checklists
Document everything. A signed checklist at move-in prevents every deposit dispute.
This one is specific to renting to non-Japanese tenants, and it is easy to miss. A credit-affiliated guarantee company often will not guarantee a lease term that extends past the residence card expiry date. So a tenant with a card expiring in 10 months can struggle to get approved for a standard 2-year lease, even with a great income and a stable job. What works:
- Check the card expiry date before submitting, and compare it to the lease end date
- If the card is close to renewal, ask the applicant to renew it first if they can, since many renew a few months early
- Use an independent guarantee company for these cases; several will guarantee to the card date and then extend once the new card is shown
- Offer a lease term that ends near the card date, then renew alongside the visa renewal
I lost a good tenant to this once because I did not understand it and just accepted the rejection. Now it is the first thing I look at on any non-Japanese applicant’s documents.
Why I Now Run Two Guarantee Companies
After that 6-month run I stopped relying on a single guarantee company. I set up accounts with two: a credit-affiliated one as the first choice, and an independent one as the backup. When the first declines, I can re-submit to the second within a day instead of starting the whole applicant search over. The independent company’s guarantee is slightly weaker and its fee structure is a little worse for the tenant, but a covered tenant at 3 percent weaker terms beats an empty unit at 100 percent.
Of the 4 rejections, 3 were later approved by the second company. Only the applicant with the documented prior default could not get placed anywhere, and honestly that outcome was the system working. Running two companies cut my average re-submission delay from about 12 days to 2.
My Pre-Submission Checklist
Before any application goes to a guarantee company now, I check:
- Verified monthly income at 3 times rent, or 2.5 times for a studio
- Residence card expiry date compared against the lease end date, for non-Japanese applicants
- Employment of at least 1 year at the current job, or 2 years of tax returns if self-employed
- Whether the applicant volunteers any past rental trouble, since the database will find it anyway
- Which guarantee company type the agent is defaulting to, and whether I want the other one
- A backup guarantee company already set up so a rejection costs days, not weeks
Since I started pre-screening for income ratio and card expiry, my rejection rate over the following 6 months dropped from 22 percent to about 7 percent, one rejection out of 15 applications. The vacancy days I was losing to failed guarantees went from roughly 50 across the portfolio to under 10. None of this required being pickier about tenants. It required understanding what the guarantee company was going to check, and checking it first.
A guarantee rejection is not a mystery and it is not personal. It is almost always income ratio, a document date, or a database hit, and two of those three you can catch at your own kitchen table before the file ever leaves your hands. That is the approach I now use across all 9 of my properties.
Property Management Company Evaluation u2014 12-Point Checklist
Developed after switching management companies twice. Saves you from costly mistakes that took me years to learn.
ud83cudfe0 More from DIY Father
15 years of landlord experience u00b7 3 apartment buildings u00b7 DIY renovations that saved millions of yen. Browse all articles at diytosan.com
